VN central bank applies daily reference exchange rates

The State Bank of Vietnam (SBV) on January 4 launched the daily average inter-bank exchange rate between the Vietnam dong and the U.S. dollar and reference exchange rates between the dong and some other foreign currencies. The move is in line with the central bank’s Decision No. 2730/QD-NHNN dated December 31, 2015, which took effect on January 4. Based on the average inter-bank exchange rate, local banks and foreign bank branches in Vietnam that provide forex services can quote their dollar buying and selling prices on a daily basis. This rate depends on fluctuations of the average inter-bank exchange rate, developments on world forex markets having close trade, lending, borrowing and investment ties with Vietnam and macro-economic conditions. It must be compatible with Vietnam’s monetary policy targets. A deputy general director of a bank said this rate will depend on a basket of eight hard currencies, and on dollar supply and demand on the domestic market. Macro-economic issues like inflation and interest rates also affect the daily average inter-bank exchange rate. According to the central bank, the new foreign exchange management mechanism enables the dong-dollar exchange rate to move in line with dollar supply and demand in Vietnam and with global market developments, and enhance the SBV’s role in executing monetary policy. The SBV said the information of the daily average inter-bank exchange rate is to keep the forex market stable and support macro-economic stability and operations of businesses. The central bank pledges to adopt appropriate measures and is willing…